With new extraction techniques tapping into new gas reserves, natural gas liquids (NGLs) are flowing like never before.
In 2010, output hit an all-time high, with more than 2 million barrels produced a day, the Energy Information Administration (EIA) said today. Propane and ethane accounted for most of the NGL boost; propane was about 30-percent of the haul and the related plastic-making compound ethane was about 40-percent.
NGLs are a byproduct of processing natural gas, which is primarily methane. These liquids are typically stripped out, piped to processing plants, then split for individual sale. And for the past heating season — when natural gas prices dipped and liquids prices rose — these NGLs were gravy for gas producers, improving the financials of a dig.
The downside of the liquids bonanza? The system of pipe and plants that handles the NGLs is straining to keep up. The hub at Conway, Kan., has a glut of gas it cannot process, which has softened prices there, according to one report. And with fracking and horizontal drilling still sucking up new supplies, NGL production is expected to continue higher, keeping pressure on the infrastructure.